Malaysia's Tenaga seeks loan to pay for S. Kalimantan coalmine

Malaysian power firm Tenaga Nasional Bhd has mandated Standard Chartered to arrange a US$68 million loan for its purchase of a coalmine in South Kalimantan, an industry source told Reuters on Friday.

Tenaga's 70 percent-owned subsidiary TNB Coal International Ltd in December agreed to buy Dynamic Acres Sdn Bhd, which owns 99 percent stake at PT. Dasa Eka Jasa Tama, a South Kalimantan?based coal mining, for US$85 million.

Reuters reported the six-year loan accounts for 80 percent of the 323 million ringgit price that Tenaga will pay for the mine's owner, Dynamic Acres Sdn Bhd, while the rest will be financed internally.

"The drawdown will be at the end of the month and the deal itself will be completed by then," the source said.

State-controlled Tenaga is trying to reduce dependence on gas, which makes up some 65 percent of the firm's fuel for electricity generation as of end-February. Coal accounts for 31 percent of its fuel mix.

Tenaga Chairman Awang Adek Hussin said earlier that Dynamic Acres' coalmine had estimated reserves of 35 million tons.

Tenaga's newest plant is a 2,100-megawatt (MW) coal-fired station in the northern state of Perak and its first unit of 700 MW started commercial production in April.

Even before the proposed acquisition, another TNB's power plant, Kapar Power Station, has already been using coal from the mine, which started operations in 1997. (*)